Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Class certification denied in California action against payment processor over ebook website advertising, (Nov 1, 2013)

By Tobias J. Gillett, J.D., LL.M.

A plaintiff asserting putative class action claims under California’s False Advertising Law (FAL), Consumers Legal Remedies Act (CLRA), and Unfair Competition Law (UCL) against a payment processor that allegedly participated in the false promotion of websites offering ebook downloads failed to show that her proposed class satisfied the commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a), the federal district court in San Francisco has ruled (Yordy v. Plimus, Inc., October 29, 2013, Henderson, T. ). Thus, the plaintiff’s motion for class certification was denied.

According to her complaint, Kimberly Yordy paid a one-time $49.99 fee for access to the website TheNovelNetwork.com. The plaintiff claimed that the website promised unlimited downloads of bestselling ebooks. Yordy alleged that the website did not actually offer the promised ebooks, and instead only offered links to ebooks already available elsewhere on the Internet for free. She alleged that TheNovelNetwork.com was one of 19 such websites utilizing the same scheme of offering unlimited downloads for a one-time fee, but providing only content already available for free elsewhere or content that violated copyright law. She claimed that Plimus controlled the advertising of all of these websites, and profited by taking a percentage of each fee as a payment processing charge.

Yordy asserted putative class action claims against Plimus for violation of the FAL, the CLRA, and the UCL, as well as various common law claims. Plimus denied the charges, and claimed it only processed payments for the websites and connected them to third-party marketers, but was not involved in their promotion. Yordy moved for class certification.

The court explained that Federal Rule of Civil Procedure 23(a) requires a plaintiff to demonstrate that (1) “the class is so numerous that joinder of all members is impracticable,” (2) “there are questions of law or fact common to the class,” (3) “the claims or defenses of the representative parties are typical of the claims or defenses of the class,” and (4) “the representative parties will fairly and adequately protect the interests of the class.” Courts have also read Rule 23(a) to require that the class be ascertainable.

Ascertainability. Yordy’s proposed class satisfied the ascertainability requirement, according to the court. The alleged misrepresentations were communicated to the public at large on the face of the websites, and all putative class members would have been exposed to them because they had to access the websites to pay the fee. Therefore, “no individualized inquiry is required to determine class membership,” according to the court.

Numerosity. Plimus did not dispute that the numerosity requirement was satisfied, and the court found that the volume of transactions also indicated that the requirement had been met.

Commonality. However, Yordy failed to demonstrate that her proposed class satisfied the commonality requirement, according to the court. Although Yordy asserted that the case presented common questions regarding “whether Plimus is liable for facilitating and promoting” the websites, and “whether Plimus had knowledge of the fraudulent nature of the” websites, she still had to demonstrate “the capacity of a classwide proceeding to generate common answers.” Yordy had provided evidence of communications between Plimus and only one of the websites, and the other evidence she provided did not demonstrate that Plimus was involved in the advertising or promotion of the websites. The record “contain[ed] no hint of commonality between Plimus’s relationships with each of the” websites, in the court’s view.

Typicality. Yordy also failed to show that her claims were typical of members of her proposed class, according to the court. Although the misrepresentations on each website may have been similar, she had not shown “that Plimus’s conduct in bringing about each of those misrepresentations was similar such that Yordy’s claim against Plimus would be similar to class members who visited other” websites.

Adequacy. Although Plimus did not explicitly dispute whether Yordy was an adequate class representative, the court noted that “a class representative must be part of the class and possess the same interest and suffer the same injury as the class members.” Since she had not shown that she shared common claims with the class members, or that her claims were typical of those of the class members, the court was “doubtful that she could adequately represent class member claims that are disparate from her own.”

The case is No. C12-0229 TEH.

Attorneys: Sean P. Reis (Edelson LLC) for Kimberly Yordy. Nickolas A. Kacprowski (Kirkland & Ellis LLP) for Plimus, Inc.

Companies: Plimus, Inc.

Cases: StateUnfairTradePractices CaliforniaNews